Tesla Bets the Factory

Tesla $TSLA ( ▲ 3.33% ) topped fourth-quarter expectations this week. But Jefferies $JEF ( ▼ 0.03% ) says the headline numbers missed the point.

To analysts, the beat was overshadowed by Tesla’s next act: a dramatic escalation in spending on what management now calls Physical AI. The firm plans to wind down production of several popular EV models, shifting focus to physical robots and other autonomous equipment.

Jefferies analyst Philippe Houchois described the earnings call as Tesla’s most revealing in quarters; not due to its margins or cash today, but rather, to what Tesla is committing to build tomorrow.

Jefferies balked at Tesla’s plan to spend more than $20 billion in capital expenditures in 2026 and beyond, more than double 2025 levels.

That figure covers six business units and reflects not just ambition, but infrastructure requirements that could weigh on earnings confidence.

Barclays $BCS ( ▼ 0.48% ) echoed the concern, calling the end of Model S and X production a symbolic baton pass from autos to Physical AI.

Wells Fargo $WFC ( ▼ 0.17% ) and UBS $UBS ( ▼ 2.1% ) went further, warning that higher capex raises execution risk, stretches timelines, and increases uncertainty around when returns materialize.

Jefferies cautioned that multiple launch milestones could slip, undermining confidence in forward earnings.

While Tesla holds a sizable cash balance, the firm noted that funding could still become a topic as spending ramps.

The takeaway across Wall Street was divisive but consistent. Tesla’s future may no longer hinge on cars. Now, analysts say the cost, risk, and patience required to get there are front and center.